5-26-1      Definitions.
5-26-2      Deadlines for payments.
5-26-3      Interest on overdue payments--Rate.
5-26-3.1      Payment of less than five dollars in interest prohibited.
5-26-4      Additional appropriations for interest prohibited.
5-26-5      Disputed payments exempt--Notice of dispute required.
5-26-6      Time for payments to subcontractors and suppliers--Interest on overdue amounts--When payments due.
5-26-7      Citation of chapter.
5-26-8      Exemptions of transactions between government agencies.

5-26-1. Definitions.

Terms used in this chapter mean:

(1)    "Agency," each association, authority, board, branch, commission, committee, council, department, division, office, officer, system, task force, or other agent of the state government vested with the authority to exercise any portion of the state's sovereignty and any county, municipality, public school district, and any officer, board, or commission empowered by law to enter into contracts for the construction of public improvements or for providing public services;

(2)    "Business," a business, institution, association, profession, occupation, or calling of every kind, whether or not conducted for profit;

(3)    "Contract," invoice, purchase order, or vendor contract;

(4)    "Property," anything of value, including but not limited to, real estate, tangible and intangible personal property, contract rights, choses-in-action and other interests in or claims to wealth, admission or transportation tickets, captured or domestic animals, electric or other power and signatures which purport to create, maintain, or extinguish any legal obligation;

(5)    "Service," labor that does not include a tangible commodity. The term includes, but is not limited to: labor; professional advice; telephone, cable television, and other utility service; accommodations in hotels, restaurants, or elsewhere; admissions to exhibits and entertainments; the use of machines designed to be operated by coin or other thing of value; and the use of rented real or personal property.

Source: SL 1984, ch 41, § 1; SL 1985, ch 45, § 1; SL 1988, ch 59, § 1.

5-26-2. Deadlines for payments.

An agency which acquires property or services pursuant to a contract with a business shall pay for each complete delivered item of property or service on the date required by contract between the business and agency or, if no date for payment is specified by contract, within forty-five days after receipt and written acceptance of property or services and receipt of the invoice covering the delivered items or services.

Source: SL 1984, ch 41, § 2; SL 1985, ch 45, § 2; SL 1987, ch 61, § 3; SL 1988, ch 59, § 2.

5-26-3. Interest on overdue payments--Rate.

Any proper invoice not paid within forty-five days shall accrue interest beginning on the thirtieth day after receipt of property or service and receipt of the invoice covering the delivered items or services. Interest shall accrue and be charged on any payment overdue under § 5-26-2 at the Category B rate of interest as established in § 54-3-16 or at the rate specified by contract.

Source: SL 1984, ch 41, § 3; SL 1985, ch 45, § 3; SL 2018, ch 47, § 1.

5-26-3.1. Payment of less than five dollars in interest prohibited.

No agency is required to pay interest due because of late payment if the interest is less than five dollars.

Source: SL 1985, ch 45, § 5; SL 1988, ch 59, § 3.

5-26-4. Additional appropriations for interest prohibited.

An agency may not seek additional appropriations to pay interest which accrues as a result of its failure to make timely payments required by § 5-26-2.

Source: SL 1984, ch 41, § 4.

5-26-5. Disputed payments exempt--Notice of dispute required.

No interest accrues under this chapter if an agency's failure to timely pay interest required by § 5-26-3 is the result of a dispute between the agency and the business over the amount due or over compliance with the contract. In case of dispute, the agency shall, within thirty days of receipt of property or services and receipt of invoice, give written notice to the business of disagreement with property or services. The notice shall include the reasons for and other pertinent details of the dispute and a copy of the notice shall be kept on file with the agency.

Source: SL 1984, ch 41, § 5; SL 1985, ch 45, § 6; SL 1988, ch 59, § 4; SL 2018, ch 47, § 2.

5-26-6. Time for payments to subcontractors and suppliers--Interest on overdue amounts--When payments due.

Upon payment by an agency, a business that has acquired under contract, property or services in connection with the business's contract with the agency from a subcontractor or supplier, shall pay the subcontractor or supplier within thirty days after receiving payment from the agency. Interest at the Category B rate of interest as established in § 54-3-16 shall accrue and is due any subcontractor or supplier who is not paid within thirty days after the business receives payment from the agency, unless otherwise provided by contract between the business and the subcontractor or supplier. Interest begins to accrue on the thirty-first day at the rate specified in this section. Payment is due when the subcontractor or material supplier has satisfied the terms of the contract or material delivery agreement.

Source: SL 1984, ch 41, § 6; SL 1988, ch 59, § 5; SL 2018, ch 47, § 3.

5-26-7. Citation of chapter.

This chapter may be cited as the South Dakota Prompt Payment Act.

Source: SL 1984, ch 41, § 7.

5-26-8. Exemptions of transactions between government agencies.

The provisions of this chapter do not apply to transactions between government agencies unless otherwise authorized by statute.

Source: SL 1985, ch 45, § 4.